Global manufacturing production: Momentum rapidly decelerating!

The August manufacturing PMIs came in mixed. The U.S. and China surprised on the upside while Japan disappointed with its manufacturing sector barely growing.

Country

Manufacturing PMI

August 2010

July 2010

Trend

United States

56.3

55.5

Higher, expanding

Euro zone

55.1

56.7

Lower, expanding

Germany

58.2

61.2

Robust, slowing

France

55.1

53.9

Higher, expanding

Greece

43.0

45.3

Weaker, contracting

Italy

52.8

54.4

Softer, expanding

Spain

51.2

51.6

Softer, expanding slowly

Ireland

51.1

51.4

Softer, expanding slowly

U.K.

54.3

56.9

Softer, expanding

Japan

50.1

52.8

Weaker, barely expanding

Emerging Economies

Brazil

49.5

51.8

Moved to contraction

China

51.7

51.2

Higher, expanding slowly

Czech

57.3

56.8

Robust, improving

Poland

53.8

52.1

Higher, expanding

Turkey

51.3

52.8

Softer, expansion slowing

India

57.2

57.6

Robust, slowing

Russia

52.9

52.7

Higher, expanding

South Africa

50.3

49.5

Expanding again

Taiwan

49.2

50.5

Weaker, contracting

Global

54.1

55.1

Softer, expanding

Sources: Markit; CFLP; ISM; Plexus

The downtrend of our global GDP-weighted Manufacturing PMI for the major economies (U.S., U.K., Euro zone, Japan and China) is now firmly under way. The measure in August came in weaker at 54.1 compared to 55.1 in July, the fourth consecutive decline since the high of 57.6 in April.

Sources: ISM; Markit; CFLP; Plexus Asset Management.

Sources: ISM; Markit; CFLP, Plexus Asset Management.

The downtrend in the global weighted manufacturing PMI is indicating a rapid deceleration of global manufacturing production growth.

OECD industrial production growth in July is estimated to have slowed to 9% on a year-ago basis from a high of an estimated 10.5% in May. The GDP-weighted global manufacturing PMI suggests that industrial production growth has slowed down further in August to a pace of between 7% and 8%, with a further slowdown in September to approximately 5% to 6%.

Sources: I-Net; Plexus Asset Management; ISM; Markit.

Non-manufacturing and services PMIs due within the next few days are likely to give better insight into where the global economy is heading.